General Secretary To Lam affirmed that this administrative reorganization is not just about adjusting geographical boundaries, but about “restructuring the economic space and allocating national resources.” This is not a short-term solution, but a strategic step, opening up a foundation for stable long-term development.
Minister of Home Affairs Pham Thi Thanh Tra also emphasized that the 2025 merger is not aimed at solving immediate administrative problems but at expanding development space “for the next hundred years”.
Despite the National Assembly’s assurance that while the transition is being carried out, current livelihood will be unaffected, administrative challenges will persist. With larger provinces, accessibility and governance, especially in remote areas, can be a challenge, forcing some officials and residents to travel further for some administrative tasks, disrupting routines and economic activities. In addition, the larger size also means that there could be challenges in reaching and providing public services to dispersed populations in rural areas, especially when the infrastructure of the area is underdeveloped.
The reform, particularly removal of district levels, requires transparent workforce reduction. Overstaffed local governments may face unemployment and career shifts, increasing social tensions without adequate support. Administrative restructuring requires efficient role allocation to prevent service disruptions, emphasising effective human resource management during the transition.
From Administrative Reform to Spatial Planning Transformation
The merger of provinces and centrally run cities represents not merely an administrative consolidation, but a fundamental reset of Vietnam’s spatial planning framework. For decades, development planning in Vietnam has been conducted largely within the confines of individual provincial boundaries. While this approach enabled strong local autonomy, it also produced fragmentation overlapping infrastructure investments, disconnected industrial zones, and competition rather than coordination among neighboring provinces.
By consolidating provinces into larger territorial units, the Government aims to align administrative geography with functional economic geography. The expectation is that larger provinces will possess the scale and authority necessary to plan infrastructure, land use, and industrial development at a level that better reflects regional economic realities rather than historical boundaries.
This shift is especially significant in the context of Vietnam’s new toggle master planning system under the Law on Planning, which emphasizes integrated, cross-sectoral planning. Provincial mergers force the integration of previously separate provincial master plans into a single, unified framework—creating both opportunities and transitional challenges.
Harmonisation of Provincial Master Plans
One of the most immediate consequences of provincial mergers is the requirement to harmonize multiple existing master plans. Each former province had its own:
- Socio-economic development plan;
- Provincial master plan;
- Land-use plan; and
- Sectoral infrastructure plans (transport, energy, water, waste).
After mergers, these plans must be reconciled into a single provincial planning architecture. This process involves more than technical alignment; it requires political choices about:
- Which infrastructure projects are prioritized;
- Which industrial zones are expanded, downsized, or phased out; and
- How land is allocated between urban development, industry, agriculture, and environmental protection.
In the short term (2025–2027), this harmonization process is likely to slow approval timelines for new projects, particularly those that depend on land conversion, zoning changes, or alignment with provincial master plans. However, in the medium term, a successful integration could significantly reduce inconsistencies and regulatory uncertainty.
From a policy perspective, the effectiveness of provincial mergers will be measured largely by how quickly and coherently these unified plans are completed and operationalized.
Case Study: Ho Chi Minh City as a Unified Infrastructure Network
In Ho Chi Minh City, transport infrastructure such as ring roads, metro lines, expressways, ports, and airport systems are planned as a single network. Clear functional zoning reduces duplication and inter-local competition. Plus, unified development priorities across the metropolitan region. Infrastructure investment acted as the backbone for institutional coordination. Such harmonisation has improved regional competitiveness, reduced logistics costs, and stronger integration into global supply chains.
Case Study: Red River Delta Industrial Clusters
Red River Delta Provincial Clusters are a strategic merger leveraging industrial strengths. The Bắc Ninh – Bắc Giang (electronics and supporting industries cluster) and Ninh Bình – Nam Định – Hà Nam (administrative–industrial–logistics integration) were merged on the basis of being complementary rather than competing industrial roles. Infrastructure corridors such as roads, rail, and logistics hubs are planned across former provincial boundaries. The aligned policies reduce internal competition and investor confusion. Industrial mergers give rise to stronger FDI attraction, better labour mobility, and more coherent regional growth.
Land Governance and Investment Implications
Land is the most sensitive and economically consequential domain affected by provincial mergers. Vietnam’s land governance system is highly decentralized, with provincial People’s Committees playing a decisive role in land allocation, pricing, conversion, and recovery.
Provincial mergers often lead to reclassification of land areas, particularly where industrial zones are consolidated, urban boundaries are expanded or redefined or agricultural or protected land is reassessed in light of new development priorities.
For investors, this can have dual effects. Opportunities will be presented where larger provinces create clearer industrial corridors and more predictable land supply pipelines. Risks persist where projects approved under previous plans must be revisited or re-justified under new provincial frameworks.
The integration of land-use plans across merged provinces also raises complex valuation issues. Land prices, compensation standards, and incentive regimes that differed between former provinces may need to be standardized, potentially altering project economics.
With larger provinces, land management authority becomes more centralized at the provincial level. While this can improve consistency and reduce local arbitrariness, it may also increase the processing time for land approvals and reduce the flexibility previously exercised by smaller provinces or districts. The removal of district-level administration further amplifies this shift, placing greater pressure on provincial departments to manage land decisions efficiently and transparently.
Infrastructure Development and Regional Connectivity
Infrastructure development is one of the principal justifications for provincial mergers. Fragmented provincial boundaries historically impeded cross-provincial transport corridors,integrated port–logistics systems and coordinated energy and utility networks.
Larger provinces can plan and implement transport infrastructure at a regional scale, reducing coordination costs between provinces. This is particularly relevant for expressways and arterial roads, rail and inland waterway systems and port and airport connectivity. By consolidating decision-making authority, provincial mergers are intended to accelerate project preparation and align infrastructure investments with industrial and logistics strategies.
However, during the transition period, infrastructure projects approved under old provincial plans may be reprioritized, rescoped or temporarily delayed pending review under the new provincial master plan.
From Industrial Zones to Integrated Clusters
Provincial mergers enable a shift from isolated industrial parks toward integrated industrial clusters. Larger provinces can rationalize the location of industrial zones, avoid redundant competition for the same types of investment and coordinate supporting infrastructure and workforce development.
This has significant implications for Vietnam’s ambition to move up global value chains. Larger, better-planned industrial clusters are more attractive to high-quality FDI than fragmented, under-connected zones.
Public Investment Reallocation and Project Prioritisation
Provincial mergers affect not only spatial planning but also public investment sequencing. Budgets previously allocated to separate provinces must be consolidated, and investment priorities reassessed. This means some projects may gain momentum if they align with new regional priorities, while others may be delayed or deprioritized if they are deemed redundant or less strategic. This re-sequencing can create uncertainty for contractors, developers, and investors in the short term. Over time, however, it could lead to a more disciplined and coherent public investment pipeline.
Strategic Implications for Businesses and Investors
For enterprises and FDI investors, the planning and land impacts of provincial mergers translate into a set of concrete strategic considerations.
A concrete example of this adjustment can be seen in land-related approvals. Projects that previously required coordination with district-level authorities must now be handled at the provincial level, often leading to temporary bottlenecks due to increased workload concentration. Similarly, investors may encounter situations where previously issued guidance from local authorities is no longer fully aligned with post-merger administrative structures, requiring re-confirmation or procedural clarification.
- Due diligence must extend beyond project-level approvals
Investors need to assess how their projects fit within emerging provincial master plans, not just existing permits.
- Land-intensive projects face heightened transition risk
Manufacturing, logistics, energy, and real estate projects are particularly exposed to zoning and land-use revisions during 2025–2027.
- Location strategies may need recalibration
What was once a peripheral district in a small province may become a strategic node within a larger regional province or vice versa.
- Engagement with provincial authorities becomes more critical
With greater authority concentrated at the provincial level, effective government relations and policy monitoring are essential.
Conclusion: Balancing Transition Risks and Long-Term Gains
Despite transitional challenges, provincial mergers offer a rare opportunity to correct longstanding weaknesses in Vietnam’s spatial development model. If executed well, the reform can reduce fragmentation in planning, improve infrastructure efficiency and support higher-quality, regionally integrated growth.
However, success depends on:
- Transparent and timely completion of unified master plans;
- Clear transitional guidance for investors and local authorities; and
- Institutional capacity at provincial level to manage increased complexity.
Provincial and city mergers fundamentally reshape Vietnam’s planning, land, and infrastructure governance. In the short term, they introduce uncertainty and adjustment costs. In the medium to long term, they hold the potential to transform Vietnam’s development trajectory by aligning administrative boundaries with economic realities.
The ultimate test of the reform will not be the number of provinces reduced, but whether Vietnam can use larger territorial units to deliver more coherent planning, more efficient infrastructure, and more predictable investment environments.
Read more: Benefits and risks of provincial mergers for local governance capacity
